Through a special arrangement, presented here for discussion is a summary of a current article from The Wise Marketer, a website and newsletter serving the global loyalty industry.

Cali Group, the holding company that owns California restaurant chain CaliBurger, is piloting facial recognition software to recognize loyalty program members in-store.

AI-enabled self-ordering kiosks leverage NEC’s facial recognition software to identify registered customers and immediately activate their loyalty accounts as they approach in-store kiosks. Customers need not swipe a card or type in identifying information. The system can display the customer’s favorite historical meal packages, enabling the customer to complete the ordering transaction in a matter of seconds.

If well received, the kiosks will roll out to all CaliBurger’s locations in 2018. Payments through facial recognition will be added this year, as well.

“Face-based loyalty significantly reduces the friction associated with loyalty program registration and use; further, it enables a restaurant chain like CaliBurger to provide a customized, one-on-one interactive experience at the ordering kiosk,” said John Miller, CEO of Cali Group, in a statement. “Our goal for 2018 is to replace credit card swipes with face-based payments. Facial recognition is part of our broader strategy to enable the restaurant and retail industries to provide the same kinds of benefits and conveniences in the built world that customers experience with retailers like Amazon in the digital world.”

Facial-recognition technology is more pervasive in Asia, including Alibaba’s fintech subsidiary Alipay’s launch of facial-recognition payments in KFC restaurants in Hangzhou, China. The KFC platform isn’t quite as frictionless as Cali Group’s platform, as the system requires customers to enter a cell phone number to help guard against fraud.

Privacy watchdogs remain concerned about facial recognition software. Mr. Miller tells Gizmodo that CaliBurger won’t be storing images of people, but a “unique digital fingerprint of the face itself and not any image or other identifiable information.”

He added, “We do not generate any new visual data that is not already being captured by CCTV’s (Closed-circuit televisions) in retail locations around the world.”

Unlike many surveillance cameras, CaliBurger customers also opt-in to the facial recognition experience, and do so willingly in exchange for rewards.

DISCUSSION QUESTIONS: Could facial recognition technology create as big a leap forward for loyalty as it might for payments? Are there steps retailers may have to further take to alleviate privacy concerns?

Sometimes the cutting edge can be the bleeding edge. Kudos to CaliBurger for putting theory into practice, which is always the best way to learn. A major obstacle to loyalty programs has been the extra card or app that the customer must carry and execute. If the privacy concerns can be addressed, facial recognition could be a huge factor in removing the pain points of most loyalty programs. Research indicates that Millennials are the most willing to give up something for rewards and value in return … they would be an excellent target group.

As always, results count. What is so great about this pilot is that it generates all kinds of data for measurement. The customer just needs to be reassured that it is secure and will directly benefit them.

Facial recognition makes sense for companies that want to perfect their loyalty programs, but they have a major creep-out factor for consumers. And until consumers get more comfortable with them, if ever, retailers should tread lightly, lest the programs backfire due to security and Big Brother concerns.

It’s a neat approach for their regulars. Reassuring customers along the journey is key and so is making sure the benefits outweigh the creep factor.

My concern for them and any other retailer is that while this sounds like today it’s being used for purely positive customer experience, how can they guarantee and ensure that in the future, could be two or three years’ time, the same data is not flipped to activities such as managing banned customers, or other perceived negative security aspects for the customer? Or even perhaps passing information about movements to state or federal agencies?

I believe facial recognition programs will become the new standard in loyalty programs over the next five years. The younger generations find it less “creepy” and more convenient. This Boomer is tired of a wallet full of cards, and many retailer loyalty cards live in a back-up wallet I rarely carry. I’m all-in for the technology but do expect that the data breach hurdle will need to be resolved before shoppers go beyond trusting just a few select retailers.

The easier the better and facial recognition definitely falls into that category. It will meet some privacy resistance early on, but Apple is already paving the way. Privacy is cultural and it changes over time. If the value proposition of CaliBurger rewards is right, we’ll see a critical mass of people adopt the technology and other chains look to integrate the tech. If it’s not, it’s just a matter of time until another chain strikes the right balance. Progress and innovation will always ultimately win.

This is an advancement on what is currently being done in some established retailers through security surveillance, so it is just another evolution of the frictionless digital experience. Adoption and engagement come when you remove barriers, like loyalty cards, phone numbers, etc. and allow the devices we rely on to streamline the process.

But this additional critical entry point needs to be secured by the brands that are stewards of the data and approved and authenticated by the user, and the brand needs to do their diligence for protecting and not exploiting the insights and data they garner from shoppers. Don’t get greedy! Leverage it to make the CX better but be prepared to defend the right to capture the data and the customer data itself.

This technology has been tested for more than a decade, starting with in-store kiosks. Just like the movie “Minority Report”, I see this taking hold very soon. If shoppers get benefits, they will gladly give up any privacy concerns. We’ve seen that happen around the globe. My only concern now is the accuracy of the technology, as there are challenges with a smartphone’s facial recognition in that it sees multiple people as the same person periodically. The technology has to work for this program to work.

It will be interesting to see how many customers opt in to this program. I would expect that among those who do there it be a strong age stratification with the opt in group being younger. If the CaliBurger program is successful, you are guaranteed that more retailers will try this approach. If it is not, then others will likely test but perhaps with less enthusiasm.

Anything that makes it easier for people to participate in loyalty programs is an important development. Compliance drops rapidly when users must log-in or somehow manually associate purchases with programs. This sort of development is potentially game-changing.

A customer walks through the door and is recognized. It’s like Cheers — where everybody knows your name. If a customer wants to be recognized by a company, the company should honor that privilege with a safe and confidential experience. The benefits to both sides are obvious. There’s no cheating here. You either have the customer’s confidence, or you don’t.

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"If the privacy concerns can be addressed, facial recognition could be a huge factor in removing the pain points of most loyalty programs. "